The used electric vehicle market is experiencing a notable shift, with Tesla’s resale values unexpectedly climbing even as broader EV prices soften. This reversal comes after a period of significant depreciation for the brand, and coincides with the expiration of the federal $7,500 tax credit for new electric vehicles in September.
According to data from iSeeCars, the average price of a used Tesla has risen 4.3% since the tax credit ended. This contrasts sharply with the trend observed in the wider used EV market, where prices for non-Tesla electric vehicles have fallen by 3.6% over the same period. The Porsche Taycan was the only other EV model to see used prices increase.
The most substantial price increases have been seen in Tesla’s Model S and Model X vehicles. This surge in demand arrives as Tesla plans to discontinue both models in the coming months, a decision announced by CEO Elon Musk in January, to prioritize production of the Optimus robot. The impending discontinuation appears to be driving up resale values as potential buyers seek to acquire these models before they are no longer manufactured.
The dynamics at play highlight a complex interplay between tax incentives, manufacturer strategies, and consumer demand. The expiration of the $7,500 tax credit for new EVs has undoubtedly pushed some buyers towards the used market, increasing demand for pre-owned models. This effect is particularly pronounced for Tesla, which historically has dominated the EV market and maintains a strong brand presence in the used vehicle segment.
The surge in used Tesla prices offers a degree of relief to Tesla owners who have experienced significant declines in resale values in recent years. Used Tesla prices had been in a prolonged slump since 2022, reaching new lows last year. This downturn was exacerbated by factors including increased competition and, as previously reported, Musk’s actions related to DOGE.
The current market conditions also present a potential silver lining for consumers who had been considering a Tesla but were deterred by the high price of new models. A used Model 3 now sells for an average of $25,700, bringing the prospect of Tesla ownership within reach for a broader range of buyers. This is particularly relevant given Tesla’s past struggles to deliver on promises of a $25,000 EV.
However, the broader automotive industry is facing headwinds. The EV market is currently navigating what some analysts are calling an “EV winter,” characterized by slowing sales growth and increased price sensitivity. Automakers are reassessing their EV strategies, with some companies scaling back production targets and delaying new model launches. This challenging environment is further compounded by uncertainty surrounding government policies and supply chain disruptions.
Cox Automotive data reveals that sales of used battery-powered vehicles jumped 21% in January compared to the previous year, while new EV sales declined by nearly 30% during the same period. This divergence underscores the growing importance of the used EV market as a key driver of overall EV adoption. Tesla continues to hold a dominant position in this segment, accounting for a significantly larger share of used EV sales than any other manufacturer. In January, used Tesla sales exceeded those of Audi, the second-largest retailer, by more than 10,000 vehicles.
The current situation suggests that the used EV market will continue to play a crucial role in the transition to electric mobility. As more EVs enter the used car pool, and as government incentives evolve, the dynamics of this market will likely remain fluid and subject to change. For now, the unexpected rise in used Tesla prices signals a shift in consumer behavior and a potential opportunity for both buyers and sellers in the evolving EV landscape.
